Chainlink’s LINK token increased by 26% between November 2 and November 8, surpassing $14, a level not seen since April 2022. This secured its place as the tenth largest cryptocurrency by market capitalization excluding stablecoins.
While the price movement is encouraging, is Chainlink’s current valuation of $8.1 billion justified?
According to an analysis, the significant price increase is being driven by hopes of real-world asset (RWA) tokenization and early evidence of institutional usage. However, let us go deeper to examine the present rally’s viability.
Bloomberg’s exchange-traded fund (ETF) strategists, James Seyffart and Eric Balhunas, published a research report on Nov. 8 that increased cryptocurrency traders’ confidence. They clarify in their note that the opportunity for authorizing a spot Bitcoin exchange-traded fund will open on November 9 when the US Securities and Exchange Commission completes its latest round of postponements. Seyffart believes there is a 90% chance of approval, but warns that the regulator’s final decision might be postponed until mid-January.
Altcoins have also had significant price rises in the last seven days, with Trust Wallet Token (TWT) increasing by 41%, Immutable X’s IMX (IMX) increasing by 29%, and NEO increasing by 28%. The rise of LINK reflects the favourable mood towards altcoins, particularly in light of Bitcoin’s apparent standstill around the $35,500 mark. Several good events inside Chainlink’s ecosystem have contributed to the LINK’s current success.
On November 7, Vodafone, a major European and North African telecom company, officially announced its partnership with Japanese financial conglomerate Sumitomo Corporation, which will use Chainlink oracles to facilitate transactions and offer a variety of applications such as electric vehicle charging stations and toll roads.
Pairpoint is a digital platform that allows cars and objects to engage and trade autonomously in the growing Internet of Things (IoT) ecosystem. Pairpoint works with partners such as Mastercard, HSBC, Deloitte, and IBM and uses Vodafone’s existing digital assets infrastructure.
Aside from IoT, it appears that a larger tendency favours Chainlink’s Oracle solution. RWA tokenization is on the verge of becoming mainstream, as indicated by HSBC’s Nov. 8 introduction of safekeeping services for regulated assets.
Asset managers and owners are expanding their need for custody and fund administration of digital assets, according to HSBC’s Zhu Kuang Lee. According to HSBC’s press release, the custody service will complement its HSBC Orion platform for creating digital assets and a newly launched tokenized gold offering. It’s also worth noting that HSBC oversees around $3 trillion in assets worldwide.
Despite the bright future possibilities, traders are wondering if there have been significant institutional inflows into Chainlink to sustain the 26% gain in only six days. Unfortunately, there is no infallible criteria for determining this, but Grayscale’s Chainlink Trust (GLNK), despite its relatively modest $3.9 million in assets under management, provides an encouraging outlook.
This OTC product is exchanged through ordinary stock market brokers, making it available to asset managers who are unable to invest directly in cryptocurrencies. Notably, GLNK is trading at a 320% premium to the fund’s proportionate underlying LINK holdings, signaling strong purchasing demand.
The listing of LINK on the HashKey exchange, a licensed trading platform dedicated to professional investors in Hong Kong, has added to Chainlink’s spectacular gains. Despite its August 2023 start, the exchange is associated with the same company that formed HashKey Capital, a major digital asset venture investment business founded in 2015. Chainlink’s pricing rise is justified by increasing network activity, according to on-chain analytics.
The most recent high came on November 7, 2022, coinciding with problems at the now-defunct FTX exchange. With this exception, the current two-day average of 7,700 daily Chainlink transactions is the highest since June 2021.
While some legitimate concerns have been expressed about Chainlink’s extreme centralization, its oracle domination remains unrivalled. As a result, any favourable influence on the RWA market should have a positive impact on LINK’s price, clearing the road for additional price increases over $14.
Please note that this article does not offer any instructions or suggestions regarding investment decisions. It is important for you to conduct your own research or seek professional advice from a qualified professional before conducting an investment decision.